Gold & Silver Daily

Ed's Critical Reads

Nov 28, 2014

El-Erian: 'When You Have Very Sharp Moves in Currency, Something Breaks'

The greenback hit a seven-year high against the yen and a two-year peak against the euro earlier this month.

Divergent central bank policies are fuelling the currency move. While the Federal Reserve has begun pulling back its stimulus, the Bank of Japan and European Central Bank are increasing theirs to boost their flagging economies.

"Historically, when you have very sharp moves in the currency [markets], something breaks," El-Erian told Yahoo Finance.

Traditionally it was emerging markets that suffered, El-Erian said. But, "I don't think that's the risk today. My major fear is that volatility in currency markets slowly gets translated to equity markets. Why? Because most equity investors don’t hedge their currency risk."

Today's first offering was posted on the moneynews.com Internet site at 11:53 a.m. EST on Wednesday morning---and I thank West Virginia reader Elliot Simon for sending it.  The original headline read "El-Erian: Soaring U.S. Dollar May Only Mean Trouble for Stocks".

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Tightening by superpower Fed trumps mini-stimulus in Europe and Asia

The apparent tsunami of stimulus from central banks in Asia and Europe is a mirage. The world's monetary authorities are on balance tightening.

There may or may not be good reasons to buy equities at the current giddy heights, but reliance on the totemic powers and friendly intention of central banks should not be one of them.

The U.S. Federal Reserve matters most in a financial world that still moves to the rhythm of the 10-year US Treasury bond, and still runs on a de facto dollar standard. More than 40 currencies have dollar pegs or "dirty floats", including China, joined to America's hip whether they like it or not.

Some $11 trillion of cross-border loans and bonds issued outside the US are denominated in dollars. The U.S. capital markets are still a colossal $59 trillion, more than the total for Europe and Japan combined. The Institute of International Finance says the impact of Fed action on capital flows to emerging markets is "twice as large" as moves by the European Central Bank.

This article by Ambrose Evans-Pritchard appeared on the telegraph.co.uk Internet site at 10:48 p.m. GMT on Wednesday evening---and it's the first contribution of the day from Roy Stephens.

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Russian Oil Tycoon: U.S. Shale Boom Is 'On-Par' With Dot-Com Bubble

Oil prices are plunging on Thanksgiving in the U.S. as the latest OPEC meeting saw the oil cartel announce that it will not cut production. 

And one Russian oil tycoon thinks OPEC is on a mission to get rid of the "marginal" oil players in the U.S. shale market.

According to a report from Bloomberg's Will Kennedy and Jared Ward, Leonid Fedun — vice-president and board member at Russian oil giant OAO Lukoil — said: "The shale boom is on par with the dot-com boom. The strong players will remain, the weak ones will vanish."

This story appeared on the businessinsider.com Internet site at 1 p.m. EST yesterday afternoon---and it's the second offering in a row from Roy Stephens.

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Barclays says its Swiss private bank drops out of U.S. tax deal

Barclays' private bank in Switzerland has dropped out of a U.S. program aimed at cracking down on wealthy Americans evading taxes through hidden offshore accounts, the British bank's market head for Switzerland said on Thursday.

"We have recently exited the program," Barclays executive Francesco Grosoli said at an event in Zurich, adding that the bank had done so "three or four months ago" after evaluating its options and seeking advice. Grosoli did not elaborate.

A host of Swiss banks have come forward to join the program, which requires them to hand out some previously hidden information and potentially face penalties of up to 50 percent of assets they managed on behalf of U.S. clients.

The above three paragraphs are all there is to this brief Reuters article, filed from Zurich, that appeared on their Internet site at 4:51 a.m. EST on Thursday morning.  That's three in a row from Roy S.

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Poll: Trouble for French President - 60% Disagree on Russian Warship Delivery

A leading French daily asked: 'Should France deliver Mistral ships to Russia?'

More than 120,000(!) answered.  40% said NO, but 60% said YES

This brief news item appeared on the russia-insider.com Internet site early yesterday afternoon Moscow time---and once again I thank Roy Stephens for sharing it with us.

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French jobless total hits new record in October

More people were unemployed in France in October than ever before, data showed on Thursday, highlighting continued weak activity in the euro zone's second-largest economy.

The Labour Ministry said the jobless total in mainland France rose by 28,400 to 3,460,900, a 0.8 percent increase over one month and 5.5 percent over one year.

The jobless increase in October was the biggest monthly rise since February, when the total rose by 31,500. It came after a rise in September which wiped out a slight fall in unemployment in August.

The rest of this brief Reuters news item appeared on the South African Internet site sharenet.co.za at 7:00 p.m. SAST yesterday evening---and I thank South African reader B.V. for sliding it into my in-box in the wee hours of this morning.

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Stung by Russia Sanctions, Europe Fears Losing Business to China

At a technology fair in Moscow last month, European executives faced the new reality of doing business in Russia since the West imposed sanctions: the number of companies at the international showcase had shrunk by half from a year ago.

"The impact on business couldn't be clearer. Fewer stands, fewer companies," said Mark Bultinck, a sales executive for Belgian digital screen maker Barco, which had a booth at the annual expo for the audiovisual industry.

The impact of the sanctions was already clear to Barco, as the company lost Russia's biggest shipbuilder as a client when the United States and the European Union blacklisted United Shipbuilding Corporation in July, meaning Barco could no longer sell screens to the company for its vessel training simulators.

Barco's experience shows how sanctions are having a broad impact not just on Russian companies but on European ones too and at a time when Europe's weak economy can ill afford it.

This Reuters article, filed from Brussels on Wednesday, was picked up by the russia-insider.com Internet site---and the stories from Roy just keep on coming.

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The Financial Times Thinks Ukraine's Financial Meltdown Has Arrived

A stone’s throw from this weekend’s candlelight vigils in Kiev marking a year since the start of the demonstrations that toppled Viktor Yanukovich as president, a different kind of Ukrainian was out on the street: the black market currency traders.

“Selling dollars? I’ll give you more, I’ll give you 18,” said one man outside a foreign exchange booth offering 15.50 Ukrainian hryvnia to the U.S. currency.

The re-emergence of shadow traders last seen after the Soviet Union collapsed is a sign that – a year after the Kiev protests in which 100 people died in the hope of securing a prosperous, European future – the war-torn country is sliding once again into a financial crisis.

The hryvnia has plunged 50 per cent in value this year; international reserves are at barely six weeks of import cover, half the level seen as a prudent minimum; economic output is set to contract by at least 7 per cent this year.

This must read Financial Times story was picked up by russia-insider.com Internet site early Thursday morning Moscow time---and it's another offering from Roy Stephens.

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Pensioners storm banks, sue president as economic blockade enforced on East Ukraine

Kiev is enforcing an economic blockade on eastern Ukraine, where banks are closed and cash machines and credit cards aren’t working. Disrupted social payments to the elderly have become the most acute issue.

Only a handful of cash machines are still functional in the breakaway parts of the Donetsk and the Lugansk regions, after local banks received an order from Ukraine’s central bank earlier this week to “suspend” operations.

This follows a controversial decree signed by Ukrainian President Petro Porishenko on November 16 that is now coming into effect. Kiev is cutting economic ties with rebel-held areas by freezing bank accounts and stopping social payments, including pensions.

The leaders of the self-proclaimed republics of Donetsk and Lugansk have slammed the economic isolation decision, saying it was contrary to the September Minsk peace agreements, brokered by the OSCE.

Vladimir Putin reacted to the decree on the economic blockade of eastern Ukraine by saying that the Kiev authorities were “cutting off those territories with their own hands.”

This very interesting news item put in an appearance on the Russia Today website at 11:53 a.m. Moscow time on their Thursday morning, which was 3:53 a.m. EST.  It's courtesy of Roy Stephens.

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Donetsk Republic, Ukraine officials meet in Donetsk to discuss disengagement line

Representatives of the self-proclaimed Donetsk People’s Republic (DPR) and Ukraine held a working meeting in Donetsk on Thursday to discuss disengagement line-related issues, the DPR's to the Minsk Contract Group Denis Pushilin said.

“There was a working meeting today of the working groups of Ukraine and the Donetsk Republic, which discussed the disengagement line and the settlement of various disputes, including the wording of joint documents,” Pushilin said.

He said there had been no reaction to the Donetsk Republic’s proposal for making the airport a demilitarized zone. “Regrettably, Ukraine failed to respond in any way to that proposal, which came not only from me, but from a number of other persons interested in a peace settlement,” Pushilin said.

This story, filed from Donetsk, showed up on the itar-tass.com Internet site at 4:30 p.m. Moscow time Thursday afternoon---and my thanks go out to Roy Stephens for sending it.

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Ukraine puts on parliamentary show of unity in message to Russia

Ukraine's parliament approved Arseny Yatseniuk for a new term as prime minister on Thursday in a ceremony that countered reports of high-level disunity in a message to Russia over its backing of separatists in the country's east.

Pomp and emotion characterized the opening of Ukraine's first parliament since the February fall of pro-Moscow president Viktor Yanukovich as his successor, Petro Poronshenko, declared in a keynote speech that there could be no future formula for Ukraine other than that of a single, unified state.

More than two thirds of the deputies in the 450-seat parliament voted for Yatseniuk to stay as head of government, a post he has held since protests toppled Yanukovich, prompting Russia to annex Ukraine's Crimea region and back pro-Russian rebels in the east.

In a gesture aimed at deflecting impressions of damaging rivalry between him and Poroshenko which have also alarmed Western governments, Yatseniuk raised his hand to the president and declared to cheers: "Here is my hand for carrying out all that you have just said from this tribune.

This Reuters article, filed from Kiev, put in an appearance on their Internet site at 12:02 p.m. EST yesterday---and it is, of course, courtesy of Roy Stephens.

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Investor puts Italy’s losses from Russia-E.U. sanctions at over €20 billion

The mutual sanctions between Russia and the European Union this year will cost Italy around €20-22 billion, which is higher than official estimates, an Italian investor said on Thursday.

“We speak of around €20-22 billion in net loss this year,” Vincenzo Trani, the chairman of board of directors of the Italian holding General Invest, said Thursday.

Speaking ahead of the fourth Russian-Italian economic forum, Trani said sanctions will never do anything good, adding that the country’s agriculture sector suffers the most from the crisis.

“The damage for Italy is much more than the one announced by the ministers. In real economic life, a great number of companies have been affected, and they face serious problems,” he said.

This economic news item, filed from Milan, showed up on the itar-tass.com Internet site at 1:40 p.m. Moscow time on their Thursday afternoon---and I thank Roy Stephens for sending it.

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OPEC Decides to Keep Oil Output Unchanged: Kuwait Minister

Members of the Organization of the Petroleum Exporting Countries (OPEC) decided to maintain oil extraction at current levels at a meeting in Vienna Thursday.

The price of Brent oil fell below the benchmark level of $75 per barrel upon the announcement.

An OPEC meeting was held in Vienna, where the group's member countries gathered to discuss a possible curb of oil output amid the falling of oil prices by about $40 per barrel on the global market.

Crude oil prices have fallen some 30 percent since June as the United States has increased its production, and demand has lowered amid slowing growth in China and Europe.

“The market remains in the state of excessive supply and this decision means that the problem will not be solved quickly,” said Maxim Oreshkin, the head of the ministry's long-term planning department.

This news item, filed from Vienna, was posted on the sputniknews.com website at 6:09 p.m. Moscow time yesterday---and once again my thanks go out to Roy Stephens.

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The Sell Side Chimes in on the Crude Crush: "This Will Reverberate For Years"

SocGen's head of oil research Mike Wittner warns that "this will reverberate for years"

OPEC decision to keep output target is "unambiguously bearish,"

"We are entering a new era for oil prices, where the market itself will manage supply, no longer Saudi Arabia and OPEC."   It doesn’t sound like much, but that is so fundamental, it is hard to overstate” said Wittner by phone.

Goldman warns another large leg lower in Brent oil prices to near $60/bbl would not be sustainable beyond a few months (absent significant demand weakness) as it would accelerate the rebalancing of the oil market with Canadian oil sands and US shale oil projects reaching their production variable costs

This interesting article was posted on the Zero Hedge website at 12:23 p.m. EST yesterday morning---and it's courtesy of Manitoba reader U.M.

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Giving Thanks For the Oil Collapse: It Reveals the Phony Recovery and Speculative Rot Beneath

We should be glad the price of oil has fallen the way it has (losing another 6% today as I write this). Not because it makes the gas in our cars a bit cheaper, that’s nothing compared to the other service the price slump provides. That is, it allows us to see how the economy is really doing, without the multilayered veil of propaganda, spin, fixed data and bailouts and handouts for the banking system.

It shows us the huge extent to which consumer spending is falling, how much poorer people have become as stock markets set records. It also shows us how desperate producing nations have become, who have seen a third of their often principal source of revenue fall away in a few months’ time. Nigeria was first in line to devalue its currency, others will follow suit.

OPEC today decided not to cut production, but whatever decision they would have come to, nothing would have made one iota of difference. The fact that prices only started falling again after the decision was made public shows you how senseless financial markets have become, dumbed down by easy money for which no working neurons are required.

OPEC has become a theater piece, and the real world out there is getting colder. Oil producing nations can’t afford to cut their output in some vague attempt, with very uncertain outcome, to raise prices. The only way to make up for their losses is to increase production when and where they can. And some can’t even do that.

This guest commentary appeared on the David Stockman website yesterday---and it's definitely a must read.  It's also another offering from Roy Stephens.

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Abenomics Is In The Ambulance—–But Too Late To Save JGBs

The New York Times recently lit up the Japanese Twittersphere with a cartoon that was a little too accurate for comfort. In it, a stretcher marked "economy" is loaded into an ambulance with "Abenomics" painted on the side; the vehicle lacks tires and sits atop cinder blocks. Prime Minister Shinzo Abe looks on nervously, holding an IV bag.

The image aptly sums up Japan's failure to gain traction in its push to end deflation. The Bank of Japan's unprecedented stimulus and Abe's pro-growth reforms have yet to spur a recovery in inflation and gross domestic product growth, and the country is yet again in recession. Worse, BOJ Governor Haruhiko Kuroda is rapidly running out of weapons in his battle to eradicate Japan's "deflationary mindset."

Minutes from the central bank's Oct. 31 board meeting, at which officials surprised the world by expanding an already massive quantitative-easing program, show that Kuroda now has a budding mutiny on his hands. Many of his staffers think the central bank has already gone too far to weaken the yen and buy virtually every bond in sight. That's a problem for Kuroda and Abe in two ways.

First, board members warned that the costs of further monetary stimulus outweigh the benefits. We already knew that Kuroda had only won approval for his shock-and-awe announcement by a paper-thin 5-4 margin, and that Takahide Kiuchi dissented when the BOJ boosted bond sales to about $700 billion annually. But the minutes suggest Kuroda came as close to any modern BOJ leader ever has to defeat on a policy move. Cautionary voices like Kiuchi's worry that the BOJ could be "perceived as effectively financing fiscal deficits." I'd say it's too late for that. Of course the BOJ is acting as the Ministry of Finance's ATM, just as Abe intended when he hired Kuroda. Still, the fact is that Kuroda's odds of getting away with yet another Friday surprise are nil at best.

This is your second must read story in a row.  This right-on-the-money commentary by Bloomberg columnist William Pesek was posted on their website at 9:01 p.m. Tuesday evening---and it's the second-last offering of the day from Roy Stephens.  I borrowed the headline from David Stockman's website.

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How JPMorgan struck gold with copper

December 2010 and the copper market was booming.

On the London Metal Exchange (LME), three-month metal was charging to the then all-time high of $9,550 per tonne, and front-month spreads were tightening.

LME reports at the time showed a single entity controlling over half of all eligible LME stocks, leading to a frenzy of speculation as to just who was squeezing the copper market.

JPMorgan was "outed" in the media as the controlling hand, which only fuelled further the whirl of speculation, given the same bank was proposing to launch an exchange-traded fund backed by physical copper.

Where rats and lawyers fear to tread, that's where you'll find Jamie Dimon & Co.  This incredible Reuters story appeared on their website at 8:59 a.m. EST on Thursday morning---and it's a must read as well.  I found it in on the gata.org Internet site yesterday.

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Koos Jansen: Dutch wanted their gold back more than the Bundesbank did

Bullion Star market analyst and GATA consultant Koos Jansen today analyzes how the Netherlands central bank managed to repatriate of a lot of its gold stored with the U.S. government even as the German Bundesbank has not managed to. Jansen's conclusion: The Dutch central bank actually wanted its gold returned, the Bundesbank not so much. His commentary is headlined "Dutch Gold Repatriation: Why, How, And When" and it's posted at the bullionstar.com Internet site.

In a second story, Jansen also calls attention to a Citigroup report scoffing at the Swiss Gold Initiative, a report disparaging gold as "a 6,000-year-old bubble" that yet may continue for another 6,000 years, which would make the bubble seem rather iron-clad. Jansen's commentary on the Citigroup report is headlined "Citibank Releases Anti-Gold Report Before Swiss Gold Referendum".

The links to both stories are posted in this GATA release from yesterday.

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Swiss vote provokes '6,000-year gold bubble' attack

Five million Swiss voters will decide on Sunday whether to force the Swiss National Bank to repatriate all its gold from vaults in Britain and Canada, boost its holdings of bullion to 20pc of foreign reserves and then keep the metal forever.

The “Save Our Swiss Gold” referendum is a valiant attempt by Switzerland’s army of gold bugs - and the populist Swiss People’s party (SVP) – to lead the world back to the halcyon days of the international Gold Standard. It is a primordial scream against a quantitative easing and money creation a l’outrance by the leading central banks.

Yet there is a snag. The Swiss National Bank (SNB) is the biggest printer of them all in relative terms, far outstripping the Bank of Japan, let alone the U.S. Federal Reserve or the Bank of England – mere amateurs at this game.

The SNB has boosted its balance sheet to a colossal 83pc of GDP in a maniacal – but fully justified – effort to stop the Swiss franc appreciating beyond 1.20 to the euro, and to head off deflation. It vowed to print whatever is necessary to buy foreign bonds and defend the exchange rate. It has been true to its word since 2011.

I must admit that I wasn't expecting to see a semi gold-friendly article from Ambrose Evans-Pritchard, but that's the way it ended up.  This very worthwhile read appeared on The Telegraph's website at 3:32 p.m. GMT yesterday afternoon in London---and it's the final offering of the day from Roy Stephens---and I thank him on your behalf.

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Deutsche Bank shuts down physical precious metals trading

Deutsche Bank is winding down its physical precious metals trading business, it said on Thursday, moving to further scale back its exposure to commodities.

The closure of the business will result in the loss of fewer than five positions in London, a spokesman said.

"Certain parts of the physical precious metals trading operations may be re-housed within other divisions of Deutsche Bank and we will address this over the coming months," the bank said in a statement.  The bank will retain some precious metals capability though its financial derivatives business, it said.

The decision to close down the physical precious metals business comes after Deutsche Bank shut its other physical commodities business, covering energy, agriculture, base metals and dry bulk, in December 2013.

The key sentence in this Reuters article should be self-evident---"Certain parts of the physical precious metals trading operations may be re-housed within other divisions of Deutsche Bank and we will address this over the coming months."  Besides precious metal derivatives, dear reader, what else will they be hanging on to?  The devil is always in the details.  This article, filed from London, put in an appearance on their Internet site at 9:35 p.m. IST yesterday evening.  It's certainly worth reading.  I found it on the Sharps Pixley website.

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Nov 27, 2014

U.S. Stocks Seen at Second-Most Overbought Level Since 1871

Nosebleed, anyone? U.S. have hit the second most overbought level in history, according to Yahoo Finance contributor Dana Lyons, partner at J. Lyons Fund Management.

Lyons looked at the current level of the S&P Composite measured against its long-term monthly trend since records were available back to 1871.

“Suffice it to say, the stock market is extended. Can it stay extended? The past few years prove that it can,” Lyons said in a Tumblr column picked up on Yahoo Finance.

The one time stretch in which stocks were even more overbought than now was during the November 1998-July 2001 time period, according to Lyons’ calculations.

This article appeared on the moneynews.com Internet site at 6:22 a.m. EST on Wednesday---and today's first story is courtesy of West Virginia reader Elliot Simon.

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Dollar Bulls Amass Record $48 Billion Stake in Rally: Currencies

Among the hedge-fund crowd, no currency comes close to the dollar in terms of appeal.

Together with other large speculators, the lightly regulated pools of capital have pushed net bullish-dollar positions to a record $48 billion, data from the Commodity Futures Trading Commission in Washington show. So convinced are they the greenback will extend its biggest rally since the global financial crisis that it’s now seen gaining against the euro, yen, pound and its five other major peers.

While the U.S. economy still isn’t growing as fast as it did before its 2007 plunge into the deepest contraction since the Great Depression, the outlook is more attractive when stacked against the increasing prospect of euro-area deflation, a Japanese recession and a China-led emerging-market slowdown. Bloomberg’s Dollar Spot Index has gained almost 10 percent since mid-year.

“The U.S. is still the cleanest shirt in the dirty laundry,” Jennifer Vail, the head of fixed income at Minneapolis-based U.S. Bank Wealth Management, which oversees $120 billion, said by phone on Nov. 20. “I don’t view it as a crowded trade, I view it as people piling into the dollar due to the potential for further economic growth.”

Long the dollar to the nuts---and maxed out on the short side in the 'Big 6' commodities.  The stage is set for an explosive reversal in all.  This Bloomberg article showed up on their Internet site at 11:20 a.m. MST on Wednesday---and I borrowed it from yesterday's edition of the King Report.

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Jamie Dimon's Daughter is Asking You For a Favor

After the smashing success of #AskJPMorgan comes this: "If you know any scams, crimes, or hazards that should be exposed or looked into, I want to hear from you!" - Laura Dimon

We know our readers will be delighted to help her, although one wonders: perhaps she should just call her dad?

This delightful bit of irony appeared on the Zero Hedge website at 9:41 p.m. EST last evening---and I thank Elliot Simon for bringing it to our attention.  It's worth a look.

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U.K. faces £34bn bill for black hole in E.U. budget

Auditors have identified a black hole in European Union budgets that could lead to extra demands for cash from the British taxpayer of up to £34 billion over the next six years.

David Cameron will be legally obliged to make up a share of a shortfall of £259 billion by 2020 with liabilities for the Treasury estimated at £33.7bn, calculated at the usual rate of Britain’s EU contributions.

The hole in E.U. spending has been identified by the European Court of Auditors and represents a political disaster for the Prime Minister who has made repeated pledges to bring down the amount Britain pays into Brussels budgets.

“The E.U.’s ability to just grab money from taxpayers whenever it wants is an outrage. It underlines what is structurally wrong with our relationship under the existing treaties," said Bernard Jenkin MP, the chairman of the House of Commons public administration select committee.

This story showed up on the telegraph.co.uk Internet site at 1:53 p.m. GMT yesterday---and I thank South African reader B.V. for sending it our way.

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MEPs endorse Juncker investment plan despite criticism

Most members of the European Parliament on Wednesday (26 November) endorsed Jean Claude Juncker's investment plan based on financial engineering, but critical voices said the scheme did not add up.

Juncker defended the scheme, which will use €8bn in "real" money from the E.U. budget and trigger an estimated €315bn in private and public investments over the next three years.

He described the plan variously as a "breath of fresh air" in the E.U. institutions, a "watering can" and "jump leads" - using little public money to attract more private investments by guaranteeing the riskiest parts of each project.

E.U. parliament chief Martin Schulz, a Social Democrat, was asked by journalists how he can endorse a scheme that very much resembles the "casino capitalism" that triggered the financial crisis. He said "we need this" because it will relaunch the economy.

This story appeared on the euobserver.com Internet site at 4:28 p.m. Europe time on their Wednesday afternoon---and I thank Roy Stephens for his first offering in today's column.

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Eurozone 'grinding to standstill', OECD warns

The eurozone is “grinding to a standstill” and now poses “a major risk to world growth”, the Organisation for Economic Co-operation and Development (OECD) has warned in a report which urges the European Central Bank (ECB) to expand its stimulus programmes.

The stark warning is part of the biannual economic outlook report published on Tuesday (25 November) by the Paris-based think tank, whose members represent the world’s most advanced economies apart from China.

“Intensified monetary support is critical to growth”, said Catherine L. Mann, the OECD’s chief economist and author of the Economic Outlook.

The report calls on the ECB to “further expand its monetary support including through asset purchases [quantitative easing]”.

Melt the printing presses down, kiddies---as it ain't going to help.  This story put in an appearance on the euobserver.com Internet site at 9:29 a.m. Europe time yesterday morning---and it's the second contribution in a row from Roy Stephens.

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Lavrov: Controversy Around Mistral Deal Is France's Responsibility

France is responsible for the controversy around the delivery of two Mistral-class amphibious assault ships to the Russian navy, Russian Foreign Minister Sergei Lavrov said Wednesday.

French President Francois Hollande announced on Tuesday the suspension of a $1.6 billion deal with Russia in light of Moscow's alleged role in the Ukrainian conflict.

"I don't want to comment on that. These are France's problems, not ours," Lavrov told reporters in Russia's Black Sea resort of Sochi.

"We are protected by contract. If France fails to meet its contractual obligations, the litigation process will not take long, I think," Lavrov said.

This story, filed from Sochi, appeared on the sputniknews.com Internet site at 7:26 p.m. Moscow time yesterday evening---and it's the third article in a row from Roy Stephens.

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Shell hits passenger bus in Donetsk — DPR Interior Ministry

At least two people have been killed and six more injured on Tuesday when a shell hit a passenger bus in the Oktyabrsky district of Donetsk in east Ukraine, the Interior Ministry of the self-proclaimed Donetsk People’s Republic (DPR) reported.

“The incident happened not far from the Aurora cinema theater. A shell hit the bus No. 6,” the ministry said. “Two people died and six more were injured as a result."

On November 23, two gas pipelines have been set on fire by the Ukrainian military shelling of two districts of Ukraine’s eastern city of Donetsk, the capital of the self-proclaimed Donetsk People’s Republic (DPR), the Donetskgorgaz (Donetsk City Gas) gas distribution company reported on Monday. More than 5,000 city dwellers have been left without gas supply as a result of the artillery attack.

This news item was posted on the itar-tass.com Internet site at 11:49 a.m. Moscow time on their Tuesday morning---and once again I thank Roy Stephens for sending it.

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Ukraine court upholds nationalization of Russian pipeline

The Ukrainian Supreme Commercial Court of Appeal has upheld the nationalization of 1,433 kilometers of pipeline through the country which it says was illegally registered in the name of a subsidiary of Russia’s Transneft.

A spokesman for Transneft, Igor Demin, told TASS that the company intends to appeal the decision, and added that it will lead to a decline in the transit of product, and "the pipeline asset will turn into a pile of iron."

The nationalization primarily concerns the Samara of westerly direction pipeline, which is owned by part of Southwest Transnefteprodukt, a subsidiary of Transneft. The company also owns a part of the Grozny-Armavir-Trudovaya pipeline which is currently out of service.

Ukraine and E.U. countries get Russian diesel fuel through these pipelines.

This brief story appeared on the Russia Today website at 4:13 p.m. Moscow time on their Wednesday afternoon, which was 8:13 a.m. New York time.  It's worth reading---and it's also courtesy of Roy Stephens.

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John Batchelor interviews Stephen F. Cohen on the Ukraine/Russia situation

As usual, very telling interpretive work over the Ukraine Crisis heating up. Cohen sees this as a

potential for war similar to the late 1950s. But the worry is that the sides are not talking, just reacting.

Russia is assuming that Washington wants war, and is preparing for it.

The propaganda war is currently being initiated by the European Leadership Network NATO lobby group, active hawks and active also in misinformation about Russian incursions into European territories.

The audio interview was posted on the johnbatchelor.com Internet site on Wednesday---and it runs for 39:44 minutes.  I thank reader Larry Galearis for sharing it with us.

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How to prevent the coming war: Sergei Glazyev

The hostilities in Donbass are a menace to Russia, Europe and the entire world. Failure to realize it may spark a regional war, and eventually a world one. The world media’s interpretation of that war as the Ukrainian authorities’ crusade against pro-Russian separatists for the sake of the country’s integrity is as superficial and senseless as the delusion that World War I resulted from the murder of an Austrian prince, and World War II, from the Nazis’ success in Germany’s parliamentary elections. The Russian mass media’s explanation of that war is only slightly meaningful – popular resistance in Donbass against a Nazi junta that grabbed power in Kiev in an anti-government coup.

In the meantime, without understanding the underlying causes and driving forces that keep the armed conflict going it is impossible to bring it to a halt. In this paper the Ukrainian crisis is scrutinized in the context of global economic changes that are breeding objective prerequisites for an escalation of military-political tensions in international relations. The analysis explains the motives of the main actors in the Ukrainian conflict and the technologies they employ. It also unveils the reasons why attempts to end the conflict have failed and prompts a forecast it may evolve into another world war. Avoiding that will be possible only by upsetting the cause-effect relationship between the persisting crimes, whose scale is growing in a geometric progression. Otherwise there will be no option left other than getting ready for a world war, in which many would like to see Russia as an enemy, a victim and a prize to win.

This long but absolute must read essay by Sergei Glazyev appeared on the anna-news.com Internet site last Friday afternoon Moscow time---and I thank Warsaw reader Wojtek Szala for sending it our way on Sunday, but it had to wait for today.  This is the most important article in today's column---precious metal-related or otherwise---so please give it the attention it deserves.  The bio on Sergei Glazyev is here.

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Russia won't get involved in geopolitical intrigues and conflicts - Putin

Russia threatens no one and will stay aloof from geopolitical intrigues, however strongly anyone may wish to pull the country into them, said Russia’s President Vladimir Putin, addressing a meeting on the development of the armed forces.

“We are not threatening anyone and are not planning to get involved in any geopolitical games, intrigues and especially conflicts, no matter who would want to pull us into them,” Putin said at a meeting with military chiefs in the Black Sea resort of Sochi on Wednesday.

The president stressed the importance of ensuring the sovereignty and integrity of Russia and its allies. He also said that an “integrated approach and the unification of all public authorities is needed in solving issues concerning national defense.”

This very interesting article was posted on the Russia Today website at 2:55 p.m. Moscow time on their Wednesday afternoon.  It's also courtesy of Roy Stephens.

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Using terrorists for regime change in Syria is unacceptable - Lavrov

Moscow condemns efforts to overthrow Syria's political regime using terrorist groups in the region, Russian Foreign Minister Sergey Lavrov said.

"Russia condemns the use of extremist groups in efforts to change the regime [in Syria]," Lavrov said, at a news conference on Wednesday in Sochi, after meeting his Syrian counterpart Walid Muallem.

The foreign minister called the US refusal to compromise with Syrian authorities "openly ideology-driven," saying that Syria's nuclear disarmament confirms the country's cooperation internationally.

Saying the fight against terrorism should be conducted without "double standards," the minister said strikes on the Islamic State forces without approval from Damascus violated international laws.

This story put in an appearance on the Russia Today Internet site at 4 p.m. Moscow time on their Wednesday afternoon---and the articles from Roy just keep on coming.

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OPEC heading for no output cut despite oil price plunge

OPEC Gulf oil producers will not propose an output cut on Thursday, reducing the likelihood of joint action by OPEC to prop up prices that have sunk by a third since June.

"The GCC reached a consensus," Saudi Arabian Oil MinisterAli al-Naimi told reporters, referring to the Gulf Cooperation Council which includes Saudi Arabia, Kuwait, Qatar and the United Arab Emirates. "We are very confident that OPEC will have a unified position."

"The power of convincing will prevail tomorrow ... I am confident that OPEC is capable of taking a very unified position," Naimi added.

A Gulf OPEC delegate told Reuters the GCC had reached a consensus not to cut oil output. Three OPEC delegates separately told Reuters they believed OPEC was unlikely to take any action when the 12-member organisation meets on Thursday after Russia said it would not cut output in tandem.

This Reuters article, filed from Vienna, was posted on their website at 3:18 p.m. EST yesterday afternoon---and it's the first contribution of the day from Manitoba reader U.M.

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U.S. pressing Chinese and Arab banks to sanction Russia – head of VTB bank

The U.S. is putting pressure on Chinese and Arab banks, forbidding them to work with Russian sanctioned companies, says Andrey Kostin, head of Russia's second biggest lender VTB.

"We have information on Arab countries, China, and others that US officials come, gather the heads of banks and say: "We will punish everyone who is under Russian sanctions," said Kostin, after a meeting organized by the Stuttgart Chamber of Commerce in Germany.

"We need to take this into account. Nobody wants to become BNP Paribas”, he said, meaning the large French bank that was fined $9 billion for violating US sanctions against Cuba, Iran and Sudan.

However, Kostin believes Chinese credit organizations will provide financing for projects that interest them.

This news item appeared on the Russia Today website at 2:36 p.m. Moscow time on their Wednesday afternoon was 6:36 a.m. yesterday morning EST.  It's anther contribution from Roy Stephens.

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BoJ chief watching impact of falling yen after additional easing

Bank of Japan Gov. Haruhiko Kuroda said Tuesday the central bank is closely watching the impact of the yen’s sharp fall against other major currencies following the bank’s additional monetary easing announced last month.

Speaking to a meeting of business leaders in Nagoya, Kuroda said the weakening currency could negatively affect the economy through rising prices of imports, which place a disproportionate burden on smaller companies and households, although positive aspects include improved earnings for firms operating internationally.

The impact “differs from one economic entity to another,” he said. “We will carefully watch (the environment), including effects on the real economy.”

Kuroda also expressed his hope that companies benefiting from the yen’s depreciation, which has been prompted by the BoJ’s ultra-loose monetary policy, will help spur the economy by boosting wages or increasing business investment.

As Bill King said in his column yesterday---"The above story validates reports that Kuroda is uncoupling from Abe on concern that Abenomics is not working---and is instead harming large segments of Japan’s economy."  As indicated, I found this Japan Times story embedded in yesterday's edition of the King Report.

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Gold “Price” Spikes to $1,467.50/oz on Computer Glitch?

Gold spiked higher in many price feeds overnight and was $270 higher or more than 22% higher to $1,467.50/oz at one stage in what appears to have been some form of computer glitch.

There was speculation that the price spike which came while the COMEX was closed for 30 minutes was due to a series of charting errors or misprints, a bad price feed or a computer glitch. Another example of how technology is a great enabler but can also be a great disabler.

Despite a very bullish backdrop of the Swiss gold referendum on Sunday, gold repatriation movements in Europe, Russian central bank gold buying and very robust Indian and Chinese demand, there was no breaking news that would justify such a dramatic uptick in gold.

The “usual suspects” were a fat finger trade by a large hedge fund or bank. This was quickly discounted as the price moved higher in a series of trades over a period of minutes rather than in one or two trades.

This very interesting commentary by Mark O'Byrne appeared on the goldcore.com Internet site on Wednesday---and it's worth skimming.

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HSBC, Goldman rigged platinum and palladium prices for years, suit says

Goldman Sachs Group Inc. and HSBC Holdings Plc were sued in New York over claims they conspired for eight years to manipulate prices for the precious metals platinum and palladium in what plaintiffs’ lawyers say is the first such class-action lawsuit in the U.S.

Standard Bank Group Ltd. and a metals unit of BASF SE, the world’s largest chemical company, were also sued. The four companies used inside information about client purchases and sale orders to profit from price movements for the metals used in products ranging from jewelry to cars, according to a complaint filed yesterday in Manhattan federal court.

Modern Settings LLC, a jeweler that buys precious metals and derivatives set on their prices, claims the companies “were privy to and shared confidential, non-public information about client purchase and sale orders that allowed them to glean information about the direction” of prices.

Similar lawsuits have been filed this year in Manhattan accusing banks of rigging the benchmark price for gold. Authorities around the world are examining the gold market for signs of wrongdoing.

This Bloomberg article, filed from New York, showed up on their website at 12:22 p.m. Denver time yesterday afternoon.  The first reader through the door with this story yesterday was Elliot Simon, but I borrowed the headline from a GATA release.

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Le Pen calls for audit of French gold reserves

Demands for gold reserve accountability have been rising in Europe – is this something that could spread around the world for those nations who own gold in vaults in countries other than their own – or indeed supposedly held even in their own countries? 

We have seen Germany requesting repatriation of around half of its gold reserves, mostly held in the US, the recent return of some of its foreign held gold to The Netherlands, the Swiss referendum on the return of much of the nation’s gold and the raising of its reserve levels to 20% of its foreign reserves, and now the latest is a request to M. Christian Noyer, the Governor of the Bank of France, for that nation’s gold reserves to be comprehensively audited. 

The request has come in the form of an open letter from the French right wing Front National opposition leader, Marine Le Pen. In it she requests that: 

"This comprehensive audit should contain: A complete inventory of the physical gold amounting to 2,435 tonnes currently displayed and their quality (serial number, purity, bars 'Good Delivery' ...), conducted by an independent French body (to be defined). This inventory, under supervision of a bailiff, must indicate the country in which the gold reserves are stored in France or abroad."

Lawrie Williams comments on the Le Pen's call for an audit of France's gold---and it's worth reading.  It was posted on the mineweb.com Internet site yesterday.

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Curbing central banks is the point of the Swiss Gold Initiative

Restricting the power of banks is the point, say the bugs. "It is about time that the power of central banks is contained and regulated. The Swiss gold initiative, while not ideal, would be a starting point," said Marc Faber, editor of the Gloom, Boom, Doom Report, a newsletter.

Swiss voters are likely to reject a November 30 referendum to force the Swiss National Bank to hold 20% of its reserves in gold, but you can't crush a gold bug.

Die-hard gold fans -- known as "gold bugs" -- aren't discouraged by the impending rejection of the Swiss people for their favorite metal. The Swiss National Bank and the major Swiss political parties are against the measure. On Sunday SNB president Thomas Jordan said the referendum would restrict the flexibility of the bank to respond to crises.

Restricting the power of banks is the point, say the bugs.

"It is about time that the power of central banks is contained and regulated. The Swiss gold initiative, while not ideal, would be a starting point," said Marc Faber, editor of The Gloom, Boom, Doom Report, a newsletter.

This gold-related story showed up on theguardian.com Internet site at 1:00 p.m. GMT yesterday afternoon---and I found it on the gata.org Internet site.  The actual headline reads "Ron Paul and other gold bugs keep fingers crossed for Swiss vote that could add $50 to price of gold".

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Mike Maloney: A message to the People of Switzerland

This 4:06 minute video clip is in English, of course, but it does have Swiss subtitles---and I urge you to pass it along to any Swiss readers you may know that are able to vote on this issue on Sunday.

It's not often that the citizens of a country can stick it directly to their central bank, but the Swiss have been offered this gift on a golden platter---and I hope they do what's necessary.

It was posted on the hiddensecretsofmoney.com Internet site early this week---and it's worth your time.

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Mumbai gold premiums slip but India's November imports could exceed 100 tonnes again

Gold premiums in Mumbai have dropped after the start of the Indian wedding season but November imports could well exceed 100 tonnes for the third month running, according to early indications.

Spot gold has staged a small recovery in recent sessions and physical demand in Asia is showing signs of improvement, despite premiums in India falling after buying for the annual wedding season died down.

Imports in November could be far higher than this year’s monthly average – imports in the first half of November were around 102 tonnes, Commerzbank said on Wednesday, citing reports from the Indian media. The country imported around 150 tonnes in October.

High imports could also reflect buying ahead of a possible tightening of import restrictions by Reserve Bank of India (RBI) to tackle the country’s ballooning current account deficit (CAD).

This gold-related news item was something I found on the bulliondesk.com Internet site.  It was posted there at 1:28 p.m. GMT yesterday afternoon.

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IIMA and World Gold Council set up India Gold Policy Centre

The centre is aimed towards conducting cutting-edge research on all aspects of the Indian gold industry.

The objective of the ‘India Gold Policy Centre’ is to develop insights into how the significant stocks of gold that India owns that can be used to advance growth, employment, social inclusion and the economic wealth of the nation. It aims to conduct research that has a practical application and that the industry and all stakeholders can use, leading to the development of an effective gold ecosystem in the country.

“As part of the initiative taken by IIMA to connect more closely with practice, and in line with our vision to contribute and reach out to industry, the Gold Centre will provide innovative solutions and insights for the gold industry through cutting-edge research. The research is intended to study the growth and development of the gold industry in India and globally,” said Ashish Nanda, Director, IIMA.

Commenting on the collaboration, Somasundaram PR, Managing Director, India, World Gold Council said,”It is estimated that India holds around 22,000 tonnes of gold valued at over a trillion US dollars. This historic asset can be used to enhance the nation’s prosperity by putting it to work for the economy, creating jobs, developing skills, generating exports and revenues. To develop gold’s potential, we need to understand gold’s role in the Indian economy, through high quality data, insights and research.”

Another scheme to talk Indians out of their physical gold holdings---all with the help of the World Gold Council.  This article appeared on the indianexpress.com Internet site at 3:01 p.m. IST on their Wednesday afternoon---and it's another story courtesy of reader U.M.

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Lawrence Williams: SGE figures – do they really equate to Chinese gold demand?

We have been quoting Shanghai Gold Exchange (SGE) withdrawal figures as the definitive indicator of Chinese gold demand. Last year, gold researcher Koos Jansen published a series of three articles on his website – ingoldwetrust.ch – demonstrating that as far as the Chinese are concerned the country’s gold demand is equal to gold withdrawals from the SGE. For the first of these articles see Shanghai Gold Exchange Physical Delivery Equals Chinese Demand.

The SGE rules suggest that once gold is taken out of the exchange it cannot be returned to it, but more of this later as U.S. precious metals analyst, Jeff Christian suggests this may not actually be the case.

Data from the World Gold Council (WGC), which is supplied by Thomson Reuters GFMS, comes up with the substantially lower figure for total Chinese gold demand of only 1,066 tonnes for 2013 and its Gold Demand Trends reports suggest a similar disparity between its and the SGE figures so far for 2014. This will be the data primarily used by gold analysts around the world, although a few are beginning to question it – including, obviously, Jansen.

Jeff Christian has contacted us with his views on why even CPM group’s analysis comes up with a lower overall demand figure than the SGE. Jeff is something of a bête noire for the gold investment community, as he disagrees strongly on whether there is manipulation of the gold market, but his consultancy is hugely respected within the industry and there is no doubt he firmly believes the data it puts out.

Bête noire is a wonderful choice of words---and I know that Lawrie picked it carefully.  Another good word is quisling, as he is strong with the dark side of The Force.  In my fifteen years of following the precious metals, I have never heard a kind word spoken of this man, nor a voice raised in his support.   But, in all fairness, you should read this commentary---and make up your own mind.  It was posted on the mineweb.com Internet site yesterday--and it's the final offering of the day from Manitoba reader U.M., for which I thank her.

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Nov 26, 2014

This Is What $11.71 Trillion Worth of Household Debt Looks Like

Household debt rose to $11.71 trillion in the third quarter.

According to the New York Federal Reserve's latest Household Debt and Credit report, household debt in the third quarter rose 0.7%, or $78 billion, to $11.71 trillion, up from $11.62 trillion in the second quarter.

Overall, household debt is below its $12.68 trillion peak reached in the third quarter of 2008.

"Outstanding household debt, led by increases in auto loans, student loans and credit card balances, has steadily trended upward in recent quarters," said Wilbert van der Klaauw, senior vice president and economist at the New York Fed. "In light of these data, it appears that the deleveraging period has come to an end and households are borrowing more."

Today's first story appeared on the businessinsider.com Internet site at 11:40 a.m. EST yesterday---and I thank reader U.D. for passing it around yesterday evening.

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How the World's Most Leveraged Hedge Fund Got Away with Insider Trading

While everyone is aware by now that the biggest component of SAC's abnormal outperformance over the years was its recourse to "information arbitrage" and its reliance on "expert networks", both of which managed to send the SAC logo to Federal Purgatory, if not the hedge fund's infamous art-collecting founder, one player in the massive hedge fund insider trading ring which was busted over the past few years, involves the one hedge fund, which as we have shown in the past, has the highest leverage in the U.S. if not the world: Citadel, with $142 billion in regulatory assets.

Today, we learn just how Ken Griffin's conglomerate also got its hands clean, and more importantly, how it managed to avoid any legal consequences.

As Bloomberg reported overnight, "the FBI files spell it out: An analyst at Citadel LLC, the hedge fund with $23 billion in capital invested globally, told agents he made millions of dollars trading on information from a company insider."

Normally, this would have been enough for the FBI to raid said hedge fund and at least settle for a fine, if not pursue outright prison time for those involved. This time, however, it did not.

This longish commentary about the Federals Reserve's private hedge fund was posted on the Zero Hedge Web site at 11:32 a.m. EST yesterday morning---and I thank Manitoba reader U.M. for sending it our way.

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Forex Rigging Probe: US Prosecutors to Grill London Traders

U.S. prosecutors are set to travel to London in the forthcoming weeks to probe City traders about currency market manipulation. However, British prosecutors are yet to file a criminal charge against UK financiers who rigged the rates.

U.S. Department of Justice (DOJ) officials will interview a group of current or former HSBC employees, along with other City bankers, as part of their criminal investigation into foreign exchange market (Forex) manipulation, inside sources told Reuters on Tuesday

The largely unregulated $5.3-trillion-a-day foreign exchange market is used by corporate treasurers and asset managers to value their funds.

The American body is currently investigating whether banks colluded to alter Forex rates and bolster their profits in the process. Such a maneuver is a violation of American and U.K. fraud and anti-trust laws. Prosecutors are also investigating whether traders deliberately misled their clients.

This offering from the Russia Today Web site appeared there at 5:43 p.m. Moscow time on their Tuesday---and it's the first contribution of the day from Roy Stephens.

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Symantec Discovers "Regin" Spy Code Lurking on Computer Networks

Security researchers say they have discovered a sophisticated piece of malicious code spying on researchers, governments, businesses, and critical telecommunications infrastructure since 2008.

The malware, called Regin, was first discovered by Symantec, the antivirus company, which released a white paper describing its findings on Sunday. On Monday, The Intercept, a digital magazine started by the journalist Glenn Greenwald, reported that the Regin malware is part of a decade-long joint operation by the National Security Agency and its British counterpart, the Government Communications Headquarters, or G.C.H.Q. The Intercept report is based in part on disclosures from former N.S.A. contractor Edward J. Snowden.

“In the world of malware threats, only a few rare examples can truly be considered groundbreaking and almost peerless,” Symantec wrote. “What we have seen in Regin is just such a class of malware.”

Symantec found evidence that the malware has been used on targets in 10 countries, primarily Saudi Arabia and Russia, as well as Pakistan, Afghanistan, India, Mexico, Ireland, Belgium and Austria. The Intercept reported Monday that the malware had been used to spy on companies in the European Union, notably Belgacom, a partly state-owned Belgian phone and Internet provider.

This very interesting article appeared on the New York Times Web site on Monday at 12:42 p.m. EST---and it's the second offering of the day from Roy Stephens.

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France Postpones Mistral Delivery to Russia over Ukraine "Until Further Notice"

President Francois Hollande has decided to suspend delivery of the first Mistral-class ship to Russia "until further notice," citing the situation in Ukraine as the reason, media reported an Elysee Palace statement.

"The President of the Republic believes that the current situation in the east of Ukraine still does not allow the transfer of the first Russian Mistral-type ships to Russia," a statement from the Elysée Palace said.

In this regard, Francois Hollande felt it necessary to postpone the new order to study the request for permission to supply Russia with the first Mistral vessel, the communique informed.

Russian Deputy Defense Minister Yury Borisov said it will patiently wait for the fulfillment of the contract, RIA Novosti reports.

This news story put in an appearance on the Russia Today Internet site at 11:50 a.m. Moscow time on their Tuesday morning, which was 3:50 a.m. EST on  Monday morning.

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EU Is "Aged and Weary," Pope Says

In a highly anticipated speech attended by almost all members of the European Parliament, pope Francis on Tuesday (25 November) criticised the E.U.'s treatment of migrants, its institutions, and its focus on growth and consumerism.

“Despite a larger and stronger Union, Europe seems to give the impression of being somewhat aged and weary, feeling less and less a protagonist in a world which frequently regards it with aloofness, mistrust, and even, at times, suspicion”, he said during his speech in Strasbourg.

He likened the European continent to “a grandmother, no longer fertile and vibrant”.

Francis also signalled a “growing mistrust on the part of [EU] citizens towards institutions … engaged in laying down rules perceived as insensitive to individual people, if not downright harmful.”

No flies on this guy, as he understands the situation perfectly---and isn't afraid to say so.  This article appeared on the euobserver.com Internet site at 3:34 p.m. Europe time Tuesday afternoon---and it's also courtesy of Roy Stephens.

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Jean-Claude Juncker's €315 Billion "New Deal" Dismissed as a Subprime Gimmick

The European Commission has launched a €315bn “New Deal” to pull Europe out of its economic slump over the next three years, but will provide almost no new money of its own and is relying on subprime forms of financial engineering.

The shopping list of investments and infrastructure projects will take months to sift through, and the stimulus will not reach meaningful scale until 2016. The scheme has already run into a blizzard of criticism. It depends on leverage that increases the headline figure by 15 times, leaving EU taxpayers bearing the heaviest risk while private investors are shielded from losses.

Jean-Claude Juncker, the Commission’s embattled new president, has made the plan the centre piece of his “last chance” drive to restore popular faith in the E.U. project, but it risks becoming an emblem of paralysis and failure instead.

“The money is chicken feed and it won’t do anything to kick-start growth,” said Professor Charles Wyplosz, from Geneva University. “It is unbelievable they are doing this rather than real fiscal expansion. The private sector will just take governments to the cleaners.

This Ambrose Evans-Pritchard commentary showed up on the telegraph.co.uk Internet site at 6:21 p.m. GMT yesterday evening---and it's courtesy of South African reader B.V.  It's worth your while if you have the time---and the interest.

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German Foreign Minister: "Crimea Will Remain a Source of Conflict"

German Foreign Minister Frank-Walter Steinmeier warned recently that leaders should tone down their rhetoric on Russia. SPIEGEL asked him whether his comments were directed at Chancellor Merkel and how he believes the conflict with Russia might develop.

German Chancellor Angela Merkel is a master at keeping her cool, even when the pressure becomes almost unbearable. This may explain why a speech she gave at the Lowy Institute for International Policy in Sydney, immediately following the G-20 summit in Brisbane, turned so many heads. Her comments in Sydney were the clearest indication yet that she is losing patience with Russia. "Outdated thinking in terms of spheres of influence which tramples international law underfoot must not be allowed to prevail," she said. "Russia is violating the territorial integrity and the sovereignty of Ukraine."

During the audience discussion after the speech, Merkel warned that "we're not just talking about Ukraine. We're talking about Moldavia, about Georgia. If things go on, we'll be talking about Serbia and the Western Balkans."

Coming as it did just hours after an interview with Russian President Vladimir Putin was aired on German television, the speech was seen as a direct and forceful response. And it seemed to make German Foreign Minister Frank-Walter Steinmeier uncomfortable. It is important, he said not long after Merkel's comments, "that in our use of language in public, we do not eliminate our chances of contributing to the easing of tensions and to the mitigation of conflict."

This interview/article was posted on the German website spiegel.de at 12:34 p.m. Europe time on Tuesday---and it's definitely a must read if you're a serious student of the New Great Game.  It's courtesy of Roy Stephens once again, for which I thank him.  The headline above is new---and certainly more provocative than its original title, which was German Foreign Minister Steinmeier on Russia and Ukraine.

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Russia’s Eighth Humanitarian Convoy to Deliver Aid to Eastern Ukraine on Nov. 30

The eighth convoy of Russia’s Emergency Situations Ministry is expected to deliver humanitarian aid to Donbass on November 30, the Russian deputy emergency situations minister said on Tuesday.

“Over 100 vehicles are due to cross the border on Sunday. They are to deliver 1,000 tons of cargo,” Vladimir Stepanov said.

The convoy will consist of building materials needed for the destroyed houses: glass, slate, roofing material and also fuel.

Stepanov said one half of vehicles will go to Lugansk while the other one to Donetsk. “We know exactly where this aid will go,” Stepanov said.

This short article appeared on the itar-tass.com Internet site at 10:29 a.m. Moscow time on their Tuesday morning---and once again I thank Roy Stephens for sharing it with us.

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Russia Looks to the East, but It Still Needs Europe

Anyone reading the Western business press relating to Russia recently will be left with the distinct impression that global trading relations with this part of the world are undergoing a momentous and irreversible shift east. Russian business ties with the West are severed, sanctioned and broken. Asian players, most prominently the Chinese corporations, are set to step in and fill the gaps left by retreating Western investment.

Certainly the recent fanfare of political handshaking ceremonies and deal signings would support such a proposition. The APEC Summit in Beijing in November saw Moscow and Beijing conclude an agreement between state-backed companies Gazprom and China National Petroleum Corporation (CNPC) to supply gas from Western Siberia to China, from gas fields currently piped to Europe. This follows hot on the heels of the “Power of Siberia” project agreement between these companies signed in May with a purported $400bn deal value. If both projects are completed, overall volumes of gas supplies to China could exceed those supplied to Europe over the medium term.

Nonetheless, there remains a high level of scepticism in many business circles, including many Russian ones, as to how real or achievable this pivot east really is, at least in the short to medium term. The reality is that Europe will remain by far Russia’s largest export market for gas and as a bloc its largest overall trading partner for years to come. U.S. trade with Russia is much lower, but even so the U.S. remains Russia’s single largest foreign direct investor for infrastructure and power projects.

The Gazprom-CNPC deals are still just broad framework agreements, the latest milestones in years of protracted negotiations, with much planning and negotiation of the underlying contracts still to come. When speaking to bankers and professional advisers in Moscow, Beijing and Shanghai, there is a large element of wait-and-see about the realistic levels of deal flow that might emanate from Russian-Asian business cooperation over the next few years, as compared to those relating to Russian-Western trade and investment.

This opinion/analysis piece appeared on the russia-insider.com Internet site early yesterday morning Moscow time---and it's the second offering of the day from reader B.V.

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Remarks by Foreign Minister Sergey Lavrov at the XXII Assembly of the Council on Foreign and Defence Policy, Moscow, 22 November 2014

1)  Lavrov is considered very much a "moderate" and his language has always been strictly diplomatic.  So when you read Lavrov, just imagine what folks in other Russian ministries are thinking.
2) Lavrov makes no secret of his view of the USA and of his plans for the future of our planet.  When you read his words, try to imagine what a US Neocon feels and thinks and you will immediately see why the US elites both hate and fear Russia.
3) Finally, Lavrov openly admits that Russia and China have forged an long-term strategic alliance (proving all the nay-sayers who predicted that China would backstab Russian wrong).  This is, I would argue, the single most important strategic development in the past decade.
4)  Finally, notice the clear contempt which Lavrov has for a pseudo-Christian "West" which dares not speak in defense of persecuted Christians, denies its own roots, and does not even respect its own traditions. Russia did not want this conflict.  Russia did everything in her power to prevent it.  But the West left Russia no choice and Russia now openly declares her willingness to fight and prevail.  

Of all the non-precious-metals related stories in today's column, this is by far the most important---and falls into the absolute must-read category, especially for all serious students of the New Great Game.  It was posted on the vineyardsaker.blogspot.ca Internet site yesterday---and I thank Roy Stephens for bringing it to my attention---and now to yours.

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Saudi Sights Set on US Shale at Crucial OPEC Meeting

OPEC's biggest crude producer Saudi Arabia will have its sights set on the upstart US shale oil business at a crucial cartel meeting to debate possible output cuts on Thursday.

Analysts say the kingdom is content to see shale oil producers -- and even some members of the cartel -- suffer from low prices and will resist pressure to reduce output and shore up the cost of oil.

A barrel of crude has plunged by about one third in value since June to around $80 in an increasingly competitive market.

Saudi Oil Minister Ali al-Naimi was silent about his government's intentions Monday as he arrived in Vienna ahead of the OPEC gathering.

This AFP story, filed from Riyadh, showed up on the news.yahoo.com Internet site late on Monday evening---and it's courtesy of Casey Research's own Dennis Miller.

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Four Major Oil Producers Say Current Oil Prices Too Low

Russia, Venezuela, Saudi Arabia, Mexico agreed that current oil prices were too low and decided to take coordinated actions to revert the trend, Venezuela’s foreign minister said.

Venezuelan Foreign Minister Rafael Ramirez attended energy talks in Vienna with officials from Russia, Saudi Arabia and Mexico in Vienna earlier in the day.

“Everyone agreed that the current price is bad. We will continue our work. Everyone is concerned about the price,” he told reporters after the talks.

“The price should be $100 per barrel, this is a fair price,” he said.

This news item put in an appearance on the sputniknews.com Internet site at 7:15 p.m. Moscow time on Tuesday evening---and is the final offering of the day from Roy Stephens, for which I thank him on your behalf.

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CFTC Tells CME Group to Work More on "Spoofing" Detection

CME Group Inc, the world's largest futures market operator, should continue to develop strategies to detect an illegal manipulative trading practice known as "spoofing," the U.S. Commodity Futures Trading Commission said on Monday.

Spoofing involves rapidly placing orders to create the illusion of market demand. Unsuspecting traders are then tricked into buying or selling at artificial prices, only to later find that the orders were canceled.

The practice gained notoriety last month after high-frequency trader Michael Coscia was charged with manipulating commodity futures prices in the first U.S. federal criminal prosecution of spoofing.

This Reuters article, filed from Chicago, was posted on their Web site at 6:51 p.m. EST on Monday evening---and it's courtesy of Manitoba reader U.M.

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Grant Williams: How Could It Happen?

In the new edition of his Things That Make You Go Hmmm... letter, Singapore fund manager Grant Williams writes some future history that regards GATA favorites Alasdair Macleod and Koos Jansen as prophets of a Chinese-engineered golden age -- an age golden, at least, for those who heeded the prophets and got their gold in time.

Williams' letter is headlined "How Could It Happen?" and it was posted at the mauldineconomics.com Internet site yesterday sometime--and I found it embedded in a GATA release.

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FT's Tett: Gold “Tangible” and “Clear”; People “Unnerved” About “Money” in “Bottomless Cyber Space”

While we agree that Greenspan's legacy is a tarnished one, we also recall his statement to Marc Faber at the New Orleans Investment Conference last month where he said "I never said the central bank is independent."

At that conference he also stated that the Federal Reserve was sitting on "a pile of tinder" and that gold would go "measurably higher."

Gillian Tett has a record of unbiased analysis and commentary regarding the gold markets. In 2011 she suggested that it would be "foolish to simply deride or ignore" the Gold Anti-Trust Action Committee (GATA). 

GATA's contention of manipulation of the gold markets have now been borne out.

Tett is highly respected both in journalism but also in financial and economic circles. In her previous roles, she was U.S. Managing Editor and oversaw global coverage of the financial markets. In March 2009 she was Journalist of the Year at the British Press Awards. In June 2009 her book Fool’s Gold won Financial Book of the Year at the inaugural Spear’s Book Awards.

This Financial Times story by Gillian Tett received 'the treatment' from Mark O'Byrne yesterday.  Gillian's FT story was the headline to my Friday column---and even though Mark's efforts are a day or so late, they definitely aren't the proverbial dollar short, as I consider Mark to be one of the best writers on the Internet---and his analysis of this news item in the current financial environment are definitely worth your time.  I found it on the goldcore.com Internet site yesterday.

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Nick Laird: Gold Algos Run Wild

Goldbugs hearts were racing today as gold roared up whilst Comex was closed for 1/2 hour. The price started leaping once it got over $1,200 & topped out at the price of $1,466.38 - a 22% rise of$270.

It was live on multiple websites and data feeds across the web so many got to watch the excitement. Goldbugs watched the prices on NetDania, iFeed and eSignal data feeds and on websites such as www.usagold.com and www.bulliondesk.com so the price increase appeared real.

Comex shorts must have been wetting themselves.

What must be asked is what was happening to these live quotes that gold rose almost $270 on multiple data feeds? Who was doing the watching---and who did the monitoring---and then the correction? Someone in control was watching these live feeds and reacting to them? What was happening to the quote stacks - who was buying/selling - did it really happen?

Well, dear reader, I was totally oblivious to this amazing event, as I only follow Kitco at home---and we even use Kitco pricing at the store.  I didn't even hear about it from any of my readers until early yesterday evening.  The first I heard of it was when Nick sent me this story very late yesterday afternoon Mountain Standard Time.  It's definitely worth looking at---and it's posted on the sharelynx.com Internet site.  Nick also sent along the Zero Hedge commentary on it---and it's headlined "Something Appears to Be Going On with Gold". [And as of 4:30 a.m. EST this morning, I haven't heard another thing about it. - Ed]

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French Populist Leader Joins Gold Repatriation Campaign

Marine Le Pen, leader of the populist National Front political party in France and likely France's next president if the country should last until another election, has picked up the gold repatriation issue by writing to the governor of the central bank, the Banque de France. Le Pen's letter, translated from French to English, is posted at her party's Internet site.

An official of the central bank disclosed last year that it is secretly trading gold for its own account and for other central banks "nearly on a daily basis."

That same official said this month that central banks are managing their gold reserves "more actively" these days, while worrying more about "auditability," perhaps since the gold sometimes is construed to be in more than one place at the same time.

This commentary appeared on the gata.org Internet site yesterday---and it's definitely worth reading.  And although I thank Chris Powell for wordsmithing 'all of the above'---the first person through the door with this yesterday was reader U.M.---and she also sent along the Zero Hedge commentary on this headlined Here Comes France: Right-Wing Leader Marine Le Pen Demands Central Bank Repatriate French Gold.  It's worth reading as well.

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Guardian's Report on Swiss Gold Initiative Quotes GATA Consultant Koos Jansen

The Swiss like referendums: there were 11 last year and there have been nine more this year, on subjects ranging from who pays for abortions to whether the state should buy a certain type of new fighter aircraft.

This Sunday there are three more, but one has attracted more attention than most because there are fears that if it wins majority support it could trigger a worldwide gold rush.

Five million Swiss voters are to decide on a proposal that would force the central bank to triple its gold reserves. The vote is being watched closely by financial markets and governments around the world. ...

"Gold continues to trigger impetuous and irrational reactions in many people," Sergio Rossi, professor of macroeconomics and monetary economics at Fribourg University, told the Swiss news agency SDA.

This Swiss gold referendum-related story appeared on theguardian.com Internet site at 9:24 p.m. GMT yesterday evening---and I found it posted on the gata.org Internet site.  The article's real headline reads Fears that ‘dangerous’ Switzerland referendum could spark gold rush.

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Indian Government Investigating Black Money in Swiss Banks Entering India Via Gold Import

Following reports of a sharp increase in the import of gold from Switzerland, Indian authorities have started investigating whether unaccounted money parked by Indians in banks these is entering India in the form of gold.

From this year, Swiss authorities have started disclosing that country’s import, as well as export, of precious metals. Between January and October, Switzerland exported 380 tonnes of gold to India. In January, India’s share in Switzerland’s overall gold and silver exports stood at 14.1%. This has increased to 16%.

So far this year, India has imported 27.7% of the gold exported by Switzerland; in January, this was only 15%.

The Centre has asked the customs department and the Reserve Bank of India to tally the gold imported from Switzerland with export data released by Swiss authorities and the payment for gold by India to banks and traders in Switzerland in March. A source said if both sets of data matched, one could conclude there was no direct relation between the gold imported from Switzerland to India and the black money parked in that country. “We believe even if the black money parked there is entering India through gold import, it will not come directly from Switzerland; importers will route that through Hong Kong of Dubai to hide the true identity.”

This interesting story, filed from Mumbai, was posted on the business-standard.com Internet site late Tuesday evening IST---and it's another offering from reader U.M.

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China’s Gold Imports Through Hong Kong Rise for a Third Month on Jewelry Sales

China’s gold imports from Hong Kong rose for a third month as increasing jewelry sales countered weakening demand for the metal as an investment amid falling prices.

Net imports totaled 69 tonnes in October, compared with 61.7 tonnes the previous month and 129.9 tons a year earlier, according to calculations by Bloomberg News based on data from the Hong Kong Census and Statistics Department today. Exports to the territory from China rose to 42.4 tons in October from 30.1 tons in September, the statistics department said in a separate statement. The figures don’t represent all imports of the metal by China, which doesn’t publish such data.

The value of China’s jewelry sales in October rose 2.9 percent from the previous month, according to the National Bureau of Statistics. Bullion fell below $1,200 an ounce last month and erased its gains for the year as the U.S. economy improved and the dollar strengthened on prospects for higher interest rates, damping demand for precious metals as an inflation hedge.

“Higher jewelry sales for the third month defied some earlier forecasts that Chinese demand would falter after falling prices,” Liu Xu, an independent gold analyst in Beijing, said by phone before the data was released.

As usual, the official import data through Hong Kong was leaked early---and here's the story about it in this Bloomberg article that was filed from Beijing at 3:43 a.m. Denver time on Tuesday morning.  Nick Laird won't be able to update his chart on this until the official numbers are released in the first week of December.  This is another gold-related news item from reader U.M.

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Chow Tai Fook Jewelry Group Plots New Grounds to Chase China’s Tourists

Chow Tai Fook Jewellery Group Ltd. (1929) plans to open new stores outside its main markets in Hong Kong and China, as it chases its Chinese customers outside familiar territory.

“While overseas travel is increasingly popular among the Mainland Chinese, it means more and more of their shopping budgets are spent in the new tourist destinations outside our major markets,” the world’s largest listed jewelry chain said in a statement to the Hong Kong Stock Exchange yesterday.

Chow Tai Fook plans to double its number of points of sales, including concessionaires and standalone outlets, in the next 10 years. Stores in tourist hotspots outside mainland China and Hong Kong will also be its target “to capture the spending power of the affluent outbound Mainland Chinese tourists,” it said.

The expansion plan comes as the jeweler said pro-democracy protests held near its Hong Kong stores curtailed Chinese tourists. Travelers from China splurged the most on tax-free shopping last year, accounting for 27 percent of spending, according to a study by tax-refund points operator Global Blue.

This very interesting gold-related news item, filed from Hong Kong, appeared on the Bloomberg Web site at 6:52 p.m. Mountain Standard Time yesterday evening---and once again it's courtesy of reader U.M.

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Lawrence Williams: Global Gold Supply in Deficit This Year, Even More So Next

In a previous article we have already shown that Indian and Chinese gold demand between them currently account for annual gold consumption levels of perhaps as much as 3,100 tonnes, roughly equivalent to global new mined gold production as recorded by the World Gold Council (3,115 tonnes over the 12 months to end September).

The Chinese and Indian figures we have recorded are probably themselves understated – with Indian consumption swelled by smuggled gold imports to avoid the 10% import duty and take advantage of the gold premiums on the Indian markets. China’s figures are also understated in that they are mainland China figures and do not include Hong Kong net gold imports which probably should add another 40-50 tonnes to the figure given that Hong Kong is technically part of China, but in terms of economic statistics, including gold net imports, it is treated as an independent state.

For the 12 months to end September this year, Asia, other than China and India, is reported to have consumed some 280 tonnes, Middle East 218.6 tonnes, Turkey 121.9 tonnes, Russia 73.8 tonnes, USA 174.3 tonnes, Europe ex-CIS 272.1 tonnes and Other (countries not detailed in the main table) 425.3 tonnes, giving us the overall total of 1,566 tonnes.

The WGC’s Gold Demand Trends data puts global supply for the 12 months to end-September over and above new mined production at 1,143.5 tonnes. Taking our own figures for Chinese and Indian demand as being approximately equal to global new mined production that suggest to us that gold supply is going to be in deficit this year to the tune of around 420 tonnes plus, which is fairly substantial in the supply/demand equation (around 10%).

Lawrie correctly concludes that the reason that gold prices aren't higher is because of the antics of JPMorgan et al in the Comex futures market.  This must read commentary showed up on the mineweb.com Internet site yesterday---and it's the final offering of the day from Manitoba reader U.M.---and I thank her on you behalf.

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John Hathaway: Monetary Tectonics

The modern-day central banker trades with counterparties that are giant commercial banks with derivative books of disturbing scale and complexity. It seems impossible that these commercial exposures could be constructed and maintained without the knowledge and complicity of the official sector. For example, Deutsche Bank, already a defendant in 1,000 lawsuits, claims derivative exposure that is 20 times the GDP of Germany and 5 times that of the entire Eurozone. It is not a great leap to suggest that central-bank traders and their megabank opposites – spawn of the same gene pool, schooled in the same institutions, career paths intertwined, frequenters of the same conferences, and just a speed-dial away – are ideologically indistinguishable and intellectually and morally corrupt in equal proportion. We applaud the efforts of litigators and plaintiffs already in process and those in the wings, and look forward to the depositions and discoveries yet to come.

Whether the eventual cessation of manipulative practices translates into a change of trend for the gold price remains to be seen, although it seems logical that the bullish consensus for financial assets equates to a complacent and very large short position in gold that will have to be covered (37.5 million troy ounces). More important, as we demonstrated in “Let’s Get Physical”, there is a massive asymmetry between paper claims on gold and physical metal. Should Western investment demand, accustomed to acting only through financial instruments such as ETFs, futures contracts, and derivatives, revive only modestly, the fragile link between paper claims and the real thing – which has been stretched and contorted by extreme rehypothecation (the use by financial institutions of clients’ assets, posted as collateral) – could easily shatter. The major winners in a systemic repricing of gold will be those who own or produce the real thing.

John's got such a way with words---and this right-on-the-money commentary was posted on the tocqueville.com Internet site yesterday---and I thank him for sliding a copy of it into my inbox before I found it on my own.  It's an absolute must read of course---and probably deserves a second read as well.

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Nov 25, 2014

Global Business Confidence Collapses To Post-Lehman Lows

As we noted before, despite record high stock prices and talking-heads imploring investors to believe CEOs are confident, they are not (consider the clear indication of a lack of economic confidence from tumbling capex and soaring buybacks), That is further confirmed today as Markit's survey of over 6000 firms showed optimism falling sharply in October, dropping to the lowest seen since the survey began five years ago. Hiring and investment plans were also at or near post-crisis lows, while price expectations deteriorated further. More worrying, perhaps, is the US is not decoupled whatsoever, with future expectations of US business activity at the lowest since the financial crisis.

The Markit Global Business Outlook Survey, which looks at expectations for the year ahead across 6,100 companies, showed optimism falling sharply in October, dropping to the lowest seen since the survey began five years ago. Hiring and investment plans were also at or near post-crisis lows, while price expectations deteriorated further.

This article appeared on the Zero Hedge website at 9:48 p.m. EST yesterday evening---and today's first news item is courtesy of Manitoba reader U.M.

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Senator Elizabeth Warren vs. New York Fed's William Dudley

Senate Banking Subcommittee hearing in Washington, D.C., U.S., Nov. 21, 2014.
"Improving Financial Institution Supervision: Examining and Addressing Regulatory Capture"
Financial Institutions and Consumer Protection

“I don’t think anyone should question our motives or what we are attempting to accomplish.” William Dudley

"Change has to come from the top. Either you need to fix it Mr. Dudley or we have to get someone who will." Sen. Elizabeth Warren

What a greasy little slime ball this Bill Dudley is, but he's no match for Senator Warren.   This 9:30 minute youtube.com video clip was posted there last Friday---and I thank Toronto reader 'MichaelG' for sending it along.

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Note to Dudley: Everyone Questions the NY Fed’s Motives – For Good Reasons

The NY Fed and Goldman have combined again to produce fingers scraping on a moral blackboard. The story is – not – told coherently in a New York Times piece.

I’ll comment on only two aspects of the incoherent story. First, contrary to the NYT portrayal of the story, there is typically no ambiguity about whether regulatory information is confidential and there was no ambiguity about the particular information that we read (albeit, not in the NYT) that the NY Fed employee leaked to his former colleague after he joined Goldman Sachs.

Second, the NY Fed’s head, William Dudley’s, response to the latest scandal was “I don’t think anyone should question our motives.” I will argue that given the NY Fed’s intolerable institutional conflicts of interest, and the defense of continuing that conflict by the NY Fed’s leadership, e.g., Dudley, everyone should the regional Feds’ motives.

The NYT article revealed that a former NY Fed employee “Rohit Bansal, the 29-year-old former New York Fed regulator, was [hired by Goldman]. At the time he left the Fed, Mr. Bansal was the “central point of contact” for certain banks.” You have to read two-thirds of the story before you learn Bansal’s name and reading the entire story doesn’t tell you his positions and duties at the NY Fed or Goldman.

William K. Black carves Dudley a new one in this article that appeared on the neweconomicperspectives.org Internet site last Thursday---and it's definitely worth reading.

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Sprott's Thoughts: Interview with Ex-Congressman David Stockman

Q: David, can you explain how the ‘Fed put’ works on the stock markets and bond markets? How exactly does it translate into artificially higher stock prices and lower interest rates?

A:  The Fed injects massive amounts of liquidity into Wall Street through the dealer system – that is, the 21 authorized treasury-bond dealers. The liquidity comes in the form of new credits to their bank accounts supplied by the Fed in return for the governments bonds, notes and bills, and even the GSE (Government-sponsored entity) obligations that it buys from them. The credit that the Fed supplies to the dealers is manufactured out of thin air; therefore it expands total credits and liquidity in the system. The dealers use it to buy other types of securities – stocks, bonds, derivatives positions and so forth.

Historically, the purpose of the Fed’s open-market intervention in this form was to encourage the banking system to extend credit to the business and household sectors, thereby stimulating economic growth, as predicated by the Keynesian model. That was always a one-time parlor trick, however, because with each cycle of easing leverage ratios in the business and household sectors were ratcheted steadily higher. Household debt ratios, for example, went from 80 percent of wage and salary income prior to 1975 to 220 percent by 2007.

The problem today is that we have reached ‘peak debt.’ The household sector has $13.3 trillion of debts, even after the modest post- crisis deleveraging; the ratio is still sky-high at 180 percent of wage and salary income.

Consequently, the household sector has been unable to borrow more money, no matter how much credit the Fed has injected through the dealers. That’s very different from where this whole Keynesian financial bubble started 40 years ago when we had, more or less, clean household balance sheets.

This interview was posted on the sprottglobal.com Internet site yesterday sometime.

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Terrorism laws: 'Time is right' for new police powers in the U.K.

Police and security services will get new powers as the U.K. faces a terror threat "perhaps greater than it has ever been", the home secretary says.

Unveiling a new counter-terrorism bill, Theresa May said the U.K. faced a security struggle "on many fronts".

Schools, universities and councils will be required to take steps to counter radicalisation.

Internet providers will have to retain Internet Protocol address data to identify individual users.

This article appeared on the bbc.com Internet site at 9:22 a.m. EST on Monday morning---and I thank International Man Senior Editor Nick Giambruno for passing it around.

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E.U. still undecided on France deficit

Fiscal hawks and doves within the E.U. commission and member states continue to disagree on how to deal with France's budget deficit, seen as a credibility test for the E.U..

A meeting of heads of cabinets of E.U. commissioners over the weekend ended without a clear decision on possible sanctions for Paris for having again missed the three-percent deficit target for next year.

France has a projected deficit of 4.3 percent of GDP in 2015 and has announced it will meet the deficit target only in 2017.

Handelsblatt reports that a eurozone finance ministers meeting scheduled for next Monday (1 December) to discuss the E.U. commission's verdicts on the nationals budgets is likely to be postponed.

This story, filed from Brussels, showed up on the euobserver.com Internet site at 9:22 a.m. Europe time on their Monday morning---and I thank Roy Stephens for his first offering of the day.

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Weidmann warns of "legal limits" on further moves by ECB

The head of Germany's Bundesbank cautioned the European Central Bank on Monday about the legal hurdles it would face in embarking on money printing to buy government bonds, underlining its opposition to such a move.

The remarks from Jens Weidmann, who also sits on the ECB's Governing Council, raise a further question mark over ECB President Mario Draghi's ability to deliver after Draghi threw the door open for further measures to bolster the euro zone.

Draghi's comments last week were interpreted by some as meaning that buying government bonds with new money, a policy known as quantitative easing, could come as soon as early 2015. But he faces stiff opposition from Germany.

This Reuters story, filed from Madrid, put in an appearance on their website at 11:42 a.m. EST yesterday---and I thank Manitoba reader U.M. for her first contribution to today's column.

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Not jumping for joy: Ukraine, a year later

Just over a year ago, thousands of Ukrainians took to Kiev's main square, angry at oligarchs and corruption. But instead of “Europe” and prosperity, they got a coup, more oligarchy, and war.

During the three-month “people power” spectacle in Kiev's Independence Square (Maidan Nezalezhnosti) that began on November 21, 2013, one of the protesters' favorite chants was “Who doesn't jump is a Moskal” (a derogatory term for Russians). After three months of “jumping” - which involved attacking the police, attempting to storm government buildings, and cheering US and European officials who came to support them, the protesters overthrew the legally elected president and establish their own government on February 22, 2014. It has been nine months since then – and a whole year since the “Maidan” protests began; let's try to see what they've been “jumping” for.

Much like the 2004 “Orange Revolution,” the Maidan protest was an exercise in perception management. Officially, the reason the protesters gathered was the government's balking at signing the EU accession treaty. A TV, internet and social media campaign – the very name “EuroMaidan” was a Twitter hashtag coined by some clever PR professional – got the people riled up against the government presented as corrupt, incompetent and selfish.

Was this so? Part of the problem with the E.U. treaty was that it demanded Ukraine restructure its entire apparatus of state and society to the Union's standards, which would have cost something like $19 billion a year for the next decade (per The Telegraph). But Brussels was willing to offer a paltry $750 million (€610 million) in loans. Ukraine needed much more just to stay solvent. It was, by all metrics, a bad deal for Ukraine.

This very interesting op-edge was posted on the Russia Today website at 2:28 p.m. Moscow time on their Monday afternoon, which was 6:28 a.m. EST in New York.  I thank Roy Stephens for sending it---and it's definitely worth reading if you have the time or the interest, that is.

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Summit of Failure: How the E.U. Lost Russia over Ukraine

One year ago, negotiations over a Ukraine association agreement with the European Union collapsed. The result has been a standoff with Russia and war in the Donbass. It was an historical failure, and one that German Chancellor Angela Merkel contributed to.

Only six meters separated German Chancellor Angela Merkel and Ukrainian President Viktor Yanukovych as they sat across from each other in the festively adorned knight's hall of the former Palace of the Grand Dukes of Lithuania. In truth, though, they were worlds apart.

Yanukovych had just spoken. In meandering sentences, he tried to explain why the European Union's Eastern Partnership Summit in Vilnius was more useful than it might have appeared at that moment, why it made sense to continue negotiating and how he would remain engaged in efforts towards a common future, just as he had previously been. "We need several billion euros in aid very quickly," Yanukovych said.

Then the chancellor wanted to have her say. Merkel peered into the circle of the 28 leaders of EU member states who had gathered in Vilnius that evening. What followed was a sentence dripping with disapproval and cool sarcasm aimed directly at the Ukrainian president. "I feel like I'm at a wedding where the groom has suddenly issued new, last minute stipulations."

The EU and Ukraine had spent years negotiating an association agreement. They had signed letters of intent, obtained agreement from cabinets and parliaments, completed countless diplomatic visits and exchanged objections. But in the end, on the evening of Nov. 28, 2014 in the old palace in Vilnius, it became clear that it had all been a wasted effort. It was an historical earthquake.

This long essay, which is also definitely worth reading, appeared on the German website spiegel.de at 7:00 p.m. Europe time yesterday evening---and it's also courtesy of Roy Stephens.

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Suspension of Russian coal supplies to trigger electricity shortages in Ukraine — expert

Suspension of coal supplies from Russia will entail serious energy shortages in Ukraine, a Ukrainian expert said on Monday.

“It is a very dangerous signal: if we receive no coal from Russia we have little chance to find other sources to substitute for it,” Dmitry Marunich, a co-chairman of the Ukrainian Energy Strategies Fund, told the 112 Ukraine television channel. “We will simply have no time and money to sign coal contracts with other suppliers in other countries. We must not let it happen. It will trigger a serious shortage in electricity supplies and rotating power cuts will be inevitable.”

Earlier on Monday, Ukraine’s Minister of Energy and Coal Industry Yury Prodan confirmed reports that Russian companies had suspended exports of steam coal to Ukraine.

“According to information I have received from DTEK and Centrenergo, Russian companies have suspended coal export to Ukraine,” he told the Ukrainskaya Pravda newspaper. “I do not know why but I can say that the reasons are not economic. Both DTEK and Centrenergo pay for coal in due time.”

This very interesting news item, filed from Kiev, appeared on the itar.tass.com Internet site at 10:06 p.m. Moscow time on their Monday evening---and I thank Roy Stephens for sending it.

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Russia fears ethnic cleansing in Ukraine amid rise of neo-Nazism – Putin

As Kiev continues to amass its forces in eastern Ukraine despite the ceasefire and use radical nationalist groups as armed battalions, Moscow is concerned about possible ethnic cleansing there, Russian President Vladimir Putin told ARD in an interview.

Speaking with Hubert Seipel of the German channel ARD ahead of the G20 summit, Putin warned of catastrophic consequences for Ukraine if the Kiev government continues to nurture radical nationalism and Russophobia, including in the ranks of its military and National Guard units that are still being sent as reinforcements to the country’s troubled east.

“Frankly speaking, we are very concerned about any possible ethnic cleansings and Ukraine ending up as a neo-Nazi state. What are we supposed to think if people are bearing swastikas on their sleeves? Or what about the SS emblems that we see on the helmets of some military units now fighting in eastern Ukraine? If it is a civilized state, where are the authorities looking? At least they could get rid of this uniform, they could make the nationalists remove these emblems,” Putin said.

This article showed up on the Russia Today website eight days ago---and it's also courtesy of reader M.A.

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Russia-Europe: Sanctions Losing Steam

The foreign ministers of the European Union discussed the situation in Ukraine and their turbulent relations with Moscow agreeing that there is no point to enhance sanctions against Russia.

The meeting in Brussels came on the heels of G20 summit in Brisbane and was followed by German Foreign Minister visit to Moscow in a clear sign that all sides are not ready to prolong the standoff and strive to find the solution to the crisis in Ukraine.

Studio guest Ernest Sultanov, expert from MIR-initiative, an independent think-tank in Moscow, Dr. Hubertus Hoffmann, the Founder and President of World Security Network Foundation, Horvath Gabor, Foreign Editor of Népszabadság newspaper, Budapest, and Soren Liborious, Spokesman, Head of Press and Information Delegation of the European Union to Russia, shared their opinions with Radio Sputnik

No sanctions were imposed on Russia following the talks in Brussels. Don’t you have a feeling that Europe doesn’t have stomach for sanctions?

Ernest Sultanov: The sanctions are really bad for both sides. So, I don’t think they don’t have stomach to impose the sanctions, I think both sides have to find some other solutions to resolve the issues between them.

This interview was posted on the sputniknews.com Internet site at 12 o'clock noon Moscow time on Saturday---and I thank South African reader B.V. for finding it for us.

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Christie’s Sells Serov’s Painting for Record $14.5 Million

The fine arts auctions house Christie's has sold Valentin Serov's painting Portrait of Maria Zetlin for $14,511 million during bidding in London, setting a record for a piece of Russian art sold at auction.

Serov's work was put up for auction by Israeli city Ramat Gan's administration. Christie's had initially estimated the painting's price at $2.3-$3.9 million.

"The Portrait of Maria Zetlin is without doubts, Serov's most unique work, which I had the honor of holding in my hands during a long history of my work at Christie's," International director of Christie's Russian Art Department Alexei Tizengauzen said ahead of the auction.

This interesting news story, filed from Moscow, showed up on their Internet site at 8:45 p.m. Moscow time yesterday evening local time---and I thank reader M.A. for finding it for us.

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Sun sets on OPEC dominance in new era of lower oil prices

It wouldn’t be the first time that a meeting of the Organisation of Petroleum Exporting Countries (OPEC) has taken place in an atmosphere of deep division, bordering on outright hatred. In 1976, Saudi Arabia’s former oil minister Ahmed Zaki Yamani stormed out of the OPEC gathering early when other members of the cartel wouldn’t agree to the wishes of his new master, King Khaled.

The 166th meeting of the group in Vienna next week is looking like it could end in a similarly acrimonious fashion with Saudi Arabia and several other members at loggerheads over what to do about falling oil prices.

Whatever action OPEC agrees to take next week to halt the sharp decline in the value of crude, experts agree that one thing is clear: the world is entering into an era of lower oil prices that the group is almost powerless to change.

This new energy paradigm may result in oil trading at much lower levels than the $100 (£64) per barrel that consumers have grown used to paying over the last decade and reshape the entire global economy.

This article appeared on The Telegraph's website at 1 p.m. GMT on Saturday---and it's another contribution from reader B.V.

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China ready to cut rates again on fears of deflation, sources tell Reuters

China's leadership and central bank are ready to cut interest rates again and also loosen lending restrictions, concerned that falling prices could trigger a surge in debt defaults, business failures and job losses, said sources involved in policy-making.

Friday's surprise cut in rates, the first in more than two years, reflects a change of course by Beijing and the central bank, which had persisted with modest stimulus measures before finally deciding last week that a bold monetary policy step was required to stabilize the world's second-largest economy.

Economic growth has slowed to 7.3 percent in the third quarter and policymakers feared it was on the verge of dipping below 7 percent - a rate not seen since the global financial crisis. Producer prices, charged at the factory gate, have been falling for almost three years, piling pressure on manufacturers, and consumer inflation is also weak. "Top leaders have changed their views," said a senior economist at a government think-tank involved in internal policy discussions.

This Reuters article, filed from Beijing, appeared on their Internet site at 10:49 p.m. EST on Sunday evening---and I found it posted on the gata.org Internet site.

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China's ICBC to set up offshore yuan center in Los Angeles

China's Industrial and Commercial Bank (ICBC) signed a pact with the Los Angeles city government to promote cross-border yuan trade and set up an offshore renminbi center in California, the bank said on Saturday.

The move to create an offshore RMB center in the largest state in the United States would lay the foundations for greater yuan trade with China, ICBC said in a statement.

The agreement comes at a time when many other countries are ahead of the United States in establishing cross-border trade in yuan.

This Reuters piece, filed from Beijing, was posted on their website at 3:37 a.m. EST on Saturday morning---and reader 'David in California' was the first person through the door with it on Sunday.

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Dr. Dave Janda interviews your humble scribe

Dave and I got together on Sunday afternoon over at all-talk radio WAAM-1600FM out of Ann Arbor, Michigan.  We spoke about the dire straits that the world economy is in---but most of it was about precious metals.

The audio interview posted on the davejanda.com Internet site---and it runs for about twenty-five minutes.

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Senate report shows how easily banks can rig gold, copper, and other markets

The heavy involvement of investment banks in commodity trading creates the potential for market manipulation and conflicts of interest in the gold market, and exchange-traded gold funds may be mechanisms of market manipulation contrary to the basics of supply and demand, according to the 396-page report published last week by the Permanent Subcommittee on Investigations of the U.S. Senate's Committee on Homeland Security and Governmental Affairs.

GATA's friend J.H. points out these findings on Page 38 of the report:

"Possible conflicts of interest permeate virtually every type of commodity activity. If the bank's affiliate leases an electrical power plant, the bank may attempt to use regional pricing conventions to boost its profits, even at the expense of clients that pay the higher electricity costs. If the bank's affiliate mines coal while the bank trades coal swaps, the bank may ask its affiliate to store the coal rather than sell it to help restrict supplies, and benefit from long swap positions, while causing its counterparties to incur losses. If the bank's affiliate operates a commodity-based exchange-traded fund backed by gold, the bank may ask the affiliate to release some of the gold into the marketplace and lower gold prices, so that the bank can profit from a short position in gold futures or swaps, even if some clients hold long positions.

"A fourth problem with mixing banking and commerce is that, in the context of physical commodities, it invites market manipulation and excessive speculation in commodity prices. If a bank's affiliate owns or controls a metals warehouse, oil pipeline, a coal-shipping operation, refinery, grain elevator, or exchange-traded fund backed by physical commodities, the bank has the means to affect the marginal supply of a commodity and can use those means to benefit the bank's physical or financial commodities trading positions. If a bank's affiliate controls a power plant, the bank can 'manipulate the availability of energy for advantage' or to obtain higher profits."

This commentary, along with a link to the Senate report, is posted in this GATA release from Sunday.

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Platinum and palladium shortages seen persisting

Platinum and palladium supply probably will fall short of demand for a fourth year in 2015 as more usage in vehicles helps compensate for rebounding South African mine output, according to Johnson Matthey Plc.

Platinum demand will outpace supply by 1.13 million ounces this year and palladium’s deficit will be 1.62 million ounces, according to a presentation of London-based Johnson Matthey’s platinum-group metals report. They would be the biggest shortfalls ever, based on data going back more than three decades for the metals.

A five-month mine strike that ended in June cut output from South Africa, the largest platinum producer and second-biggest for palladium. Supply shortages should continue next year partly as car demand strengthens in North America and China and stricter legislation requires more of the metals to be used in devices that curb harmful emissions.

“All things being equal, we would expect to see a good bounce back in South African supplies for both platinum and palladium,” Rupen Raithatha, research manager at Johnson Matthey, said by phone from Royston, England before the company presented the data today. “The auto side is going to be good.”

This Bloomberg article showed up on the mineweb.com Internet site yesterday---and it's courtesy of reader U.M.  Reader B.V. sent me the same story on this from the bulliondesk.com Internet site---and it's headlined "Platinum seen in record 1.33 million oz. deficit in ’14 – Johnson Matthey".

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Gold market is manipulated, Grant Williams tells Lars Schall

Interviewed by the German financial journalist Lars Schall for Matterhorn Asset Management's Gold Switzerland, Singapore fund manager and "Things That Make You Go Hmmm..." letter editor Grant Williams says there's no doubt that the gold market is manipulated, that the only question is how much, and that because of central bank intervention there's not much left to free markets.

Schall and Williams cover other subjects, including the nature of money, the abuse of money creation and credit, the likelihood of returning to a gold standard, and the Swiss Gold Initiative. The interview is an hour long and can be heard at the goldswitzerland.com Internet site.

I thank Chris Powell for wordsmithing the above paragraphs of introduction---and I must admit that I haven't had the time to listen to it.

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Goldcore: 122 Tonnes of Gold Secretly Repatriated to Netherlands

As the debate regarding whether or not Switzerland should keep the bulk of its gold reserves at home on Swiss soil reaches it's climax - the referendum takes place on Sunday - it is telling that the Dutch announced on Friday that they have just secretly repatriated 122 tonnes of their sovereign gold reserves from New York back to Amsterdam.

The repatriation movement has been driven by suspicion that the Federal Reserve and other central banks may have leased or sold gold it was holding on behalf of other countries to bullion banks and that this gold may have been used in order to suppress the price of gold in recent years.  Bizarrely, the Federal Reserve’s gold holdings have not been audited in over 50 years.

Questions are already being asked about how the Dutch were able to repatriate such a sizeable volume of gold when Germany's request was brushed aside. It may be that by taking a discreet approach the Dutch allowed the Federal Reserve room to manoeuvre - allowing them to harvest the metal from the open market. Skeptical analysts have suggested that the fall in the ETF gold holdings may have come in handy for the New York Federal Reserve.

Although the German Central Bank has stated that it trusts the Americans as custodians of it's gold reserves - despite being denied access to vaults in New York to view their own gold - the campaign for repatriation of Germany’s gold remains strong.

This must read commentary by Mark O'Byrne appeared on the goldcore.com Internet site on Monday.

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Deutsche Bank's Modest Proposal to Central Banks: "Purchase the Gold Held by Private Households"

From Deutsche bank Behavioral Finance: Daily Metals Outlook

Although gold market operators are currently preoccupied with the prospect of the SNB finding itself obliged by referendum to buy large quantities of bullion, another central bank raised the same possibility yesterday: the ECB. As odd as it sounds, given the contentious internal debate this year over asset purchases in general, ECB board member, Yves Mersch, reminded journalists that the Bank could in theory buy any asset within a QE program. This could mean government debt, equities, ETFs, or even gold. Indeed, within an effective asset purchase program it matters not so much what the asset is, than who the seller is. Given that the eurozone banking system still appears to be a bottleneck in the monetary transmission mechanism, there might be some wisdom in bypassing it. Banks do not hold gold. However, this ‘theoretical’ possibility would quickly run into practical constraints, not least the volume limitations and the problem of having to pick winners and losers.

However, the idea of gold purchases has merit because of the possible sellers. Much gold is held in private households, especially in countries like Germany. In some cases these are unwanted remnants of crisis-driven investments five years ago. A program that targeted these holdings would liberate dormant liquidity, some of which might even flow into consumption.

This very interesting article appeared on the Zero Hedge website at 3:19 p.m. EST on Monday afternoon---and I thank reader 'David in California' for sending it our way.

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Ukraine Central Bank Admits Gold Outflow, Calls It "Optimization of Reserve Structure"

A week after we reported that the head of the Ukraine central bank admitted in an unofficial, informal interview that Ukraine's gold is gone, all gone, moments ago the Central Bank revealed that, sure enough, the gold holdings in the civil war-torn country have tumbled, as a result of a decision in September to "increase the share of U.S. dollars in a reserve basket", or in other words, to sell the gold. Just don't call it that: in fact, as of today we have a brand new buzzword for gold liquidations: "optimization of international reserves."

From the central bank:  National Bank of Ukraine has optimized the structure of international reserves. This is due to timing structure of international reserves and the external position of the country. National Bank of Ukraine decided in September 2014 to increase the share of U.S. dollar in a reserve basket, because the structure of the trade balance of the country is 70.3% in US dollars, 15% in euros. 77.7% of gross foreign debt denominated in Ukraine USD in EUR - 11.2% in SDR - 5.8%.

Recently, there was a significant volatility in global currency markets associated with the strengthening of the US dollar against other world currencies. Therefore, the National Bank of Ukraine decided to reduce the share of gold in foreign exchange reserves to 8%. To this end, the international markets has sold 0.46 million. Troy ounces of gold in US dollars, respectively proportion of gold in international reserves declined to 7.9%.

It appears from this story the Ukraine's central bank that they didn't sell all their gold.  This news item put in an appearance on the Zero Hedge website at 10:16 a.m. EST on Monday morning---and reader M.A. was the first person through the door with it.

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Swiss Gold "Fire and Smoke" - "Sermons On the Mount" and "Sorcerers Apprentices"

Central bankers reached a new low overnight when Swiss National Bank President Thomas Jordan warned of "disastrous consequences" from a pulpit in a church on a historic hill in the town of Uster, Switzerland.

“The initiative is dangerous because it would weaken the SNB,” he said yesterday regarding proposals to increase the Swiss gold reserves, at a memorial service in a church which Bloomberg dubbed the 'sermon on the hill.'

The separation of church and state was one of the great achievement of recent years. It looks like we need to see a proper separation of central banking from the state. States and sovereign nations should be in control of central banks, rather than the other way around.

Central bankers and their dogmatic Keynesian money printing creed would like to see themselves and their policies as infallible. Despite, such policies having an abysmal track record throughout history and indeed in recent years.

Banks are turning out to be like lawyers.  What won't they stoop to if they have to???  It reminds me of the joke about what the difference was between a lawyer and rat---and the answer was that "there are some things that rats just won't do." This Zero Hedge piece appeared on their website at 4:51 p.m. EST on Monday---and I thank reader Harry Grant for pointing it out.  It's worth reading.

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The Swiss Referendum on Gold: What’s Missing From the Debate

The Swiss will vote on a referendum on November 30th that would ban the Swiss National Bank (SNB) from selling current and future gold reserves, repatriate foreign stored gold holdings to Switzerland, and mandate that gold must comprise a minimum of 20% of central bank assets. The SNB does not usually comment on political referendums. However, in this case it has done so quite vocally.

Why has the central bank decided to step into the political fray and oppose this initiative? What are its concerns? Are they valid or motivated by other factors?

The SNB’s primary objections to the gold initiative are three fold. 1) It claims that gold is “one of the most volatile and riskiest investments”, 2) that a 20% gold requirement will lower the “distributions to the confederation and the cantons” since gold does not pay interest like bonds and dividend paying stocks, and 3) that the 20% gold holding requirement will interfere with its ability to conduct monetary policy and complicate efforts to maintain “the minimum exchange rate”, the “temporary” policy of pegging the Swiss franc (CHF) to the Euro (EUR) it initiated in 2011 and continues to enforce to this day.

The first two concerns can quickly be addressed and discounted. Gold is indeed a volatile asset at times but so are bonds and equities. In recent years Greek, Spanish, Italian, Irish and other European bonds have been far more volatile than gold. The SMI, the Swiss stock index, lost over 50% of its value on two separate occasions between 2000 and 2009 while gold steadily rose at an annual rate of 8.50% over the same period.

This very thoughtful article was written by Eric Schreiber, independent asset manager, former head of commodities UBP, former head of precious metals Credit Suisse Zurich. All views expressed are his and may not reflect those of his former employers.   This falls into the absolute must read category---and appeared on the goldsilverworlds.com Internet site yesterday.

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Indian firm procures multimillion-dollar gold export order

Rajesh Exports, the leading Indian gold exporter, announced that it has bagged a massive export order from UAE-based jeweler. The company has reportedly secured an export order worth Rs 1,350 crore from Al Sultan Jewellery, UAE. According to the deal, Rajesh Exports will supply designer range of gold and diamond studded jewelry and medallions.

The order is to be executed by end-February next year. According to the company, the execution of the order will contribute significantly to the bottom line of the company. The Bangalore facility will be responsible to meet the order in time. The company expressed confidence that it will be able to complete the order well within the time frame. Incidentally, the Banglaore manufacturing facility, with a built-up area of 500,000 square feet is the world’s largest jewelry manufacturing facility.

Earlier in July this year, the company had secured an export order worth Rs 1,260 crores of designer range of gold and diamond studded jewelry and medallions from Al Jameelat Jewellery, UAE. The company had successfully executed the order within the stipulated deadline of 30 September 2014.

This gold-related article showed up on the resourceinvestor.com Internet site sometime yesterday---and it's the final offering of the day from Manitoba reader U.M.

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Koos Jansen: China's government and private gold reserves likely total 16,000 tonnes

China's government and private gold reserves likely total almost 16,000 tonnes, Bullion Star market analyst and GATA consultant Koos Jansen figures, calling attention to a Deutsche Bank report estimating that the People's Bank of China is accumulating gold at a rate of 500 tonnes per year.

Jansen's commentary is posted at the bullionstar.com Internet site yesterday---and I found it embedded in a GATA release.

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